What Does Retirement Income Look Like in Canada?
- Oct 20
- 3 min read
When planning for retirement, it's essential to understand what the average Canadian earns in retirement and how that compares to your own goals. Retirement income can come from many sources—including government benefits, employer-sponsored plans, and personal savings—and each plays a critical role in your financial well-being after you stop working.
According to Statistics Canada’s 2024 survey, senior families had an average after-tax retirement income of $74,200 per year, or $6,183 per month, while individual seniors averaged $33,600 annually, or $2,800 per month.
While these numbers provide a useful reference point, your retirement needs may differ. To plan effectively, it’s important to evaluate your expected lifestyle, future expenses, and how inflation may affect your purchasing power over time. Here are some key income sources to consider when building a reliable retirement plan:
Government Benefits
Most Canadians will rely in part on government retirement benefits, such as the Canada Pension Plan (CPP) and Old Age Security (OAS). CPP payouts depend on your work history and contributions. As of 2024, the maximum monthly CPP benefit at age 65 is $1,364.60, but the average Canadian receives around $831.92. You can start receiving benefits as early as 60 or delay until 70 to receive a higher payout.
OAS is determined by how long you’ve lived in Canada and your income level. In 2024, individuals aged 65–74 may receive up to $713.34 monthly, increasing to $784 after age 75. Low-income seniors might also qualify for the Guaranteed Income Supplement (GIS), which can add up to $1,065.47 per month.
However, high-income retirees may face OAS clawbacks if their annual net income exceeds $90,997, and those earning more than $142,609 may not receive OAS at all.
Employer Pension Plans
Employer-sponsored pension plans offer another important stream of income. Defined benefit plans guarantee a set monthly amount based on your salary and years of service, while defined contribution plans depend on how much you and your employer contribute, and how well your investments perform.
For many Canadians, these plans form the foundation of a stable retirement income.
Personal Savings and Investments
In addition to public and employer pensions, your own savings will play a critical role in retirement. Two of the most tax-efficient vehicles are:
RRSPs: Contributions are tax-deductible, and growth is tax-deferred until withdrawal. At age 71, RRSPs must be converted into a Registered Retirement Income Fund (RRIF).
TFSAs: Contributions are not tax-deductible, but both growth and withdrawals are tax-free, offering flexibility in managing your retirement tax burden.
Investments held in non-registered accounts can provide additional income, though they are subject to taxes on capital gains, dividends, and interest income.
Annuities
Annuities are insurance products that offer guaranteed income in exchange for a lump-sum or regular contributions. They can be a helpful solution for those looking to minimize market risk and ensure predictable income in retirement, especially as interest rates rise.
Planning for Couples
Couples can access several tax planning strategies to optimize their retirement income. Income splitting allows you to allocate up to 50% of eligible pension income to a spouse, potentially lowering your combined tax bill. Spousal RRSPs can also help equalize retirement savings and reduce taxes in retirement.
Additionally, CPP benefits can be shared between partners, which may further balance your tax liability and ensure more efficient income distribution.
In Conclusion
Knowing the average retirement income in Canada is a valuable starting point—but every retirement plan should reflect your unique lifestyle, goals, and resources. Whether you're just beginning to save or nearing retirement, working with a financial advisor can help you create a personalized strategy that ensures your financial well-being in your later years.
Contact us today to start building a retirement plan that works for you.
